REPORT 26 January 2021

ORSAM REPORT 26 January 2021

INVESTMENTS AS FOREIGN POLICY INSTRUMENTS: THE CASES OF SAUDI ARABIA, THE UAE AND QATAR

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Publication Date: 24 January 2021

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INVESTMENTS AS FOREIGN POLICY INSTRUMENTS: THE CASES OF SAUDI ARABIA, THE UAE AND QATAR

About Authors

Assoc. Prof. Ismail Numan Telci

Ismail Numan Telci completed his BA from Istanbul University, MA in European Studies at Hochschule Bremen, Germany and PhD in International Relations at Sakarya University, Turkey. As part of his PhD field research he spent 10 months at Cairo University from October 2012 to August 2013. Currently, he works as an Associate Professor at the Department of International Relations and lecturer at the Middle East Institute (ORMER) at Sakarya University. He is also Vice President and Gulf Studies Coordinator of the Center for Middle Eastern Studies (ORSAM) in Ankara. His research focuses on Turkey-Qatar relations, Gulf politics, Egyptian politics and Arab revolutions. He is editor of Middle Eastern Studies, a peer-reviewed journal published by ORSAM. Telci is the author of three books, Dictionary of Egyptian Revolution (2014), Egypt: Revolution and Counter-Revolution (2017), Egyptian Foreign Policy Since the Revolution: From Search for Change to Quest for Legitimacy (2019).

Gökhan Ereli

Gökhan Ereli was born in Ankara in 1992. He graduated from the Kırıkkale University, International Relations department with the highest cumulative GPA in his graduating class. Upon graduating, he enrolled in the Middle East Technical University (METU) International Relations Master’s with thesis program in 2015. He earned his master’s degree with the thesis “The Impact of American Exceptionalism on U.S. Foreign Policy”. Currently, he continues his studies in the Middle East Technical University (METU), International Relations Ph.D. program. Also, he is working as a research assistant within the body of ORSAM, Gulf Studies. While his main area of interest is the Gulf region and American foreign policy, his special area of interest is the foreign policies of the United Arab Emirates and Qatar. He speaks advanced English and simple Arabic.

1 CONTENTS

03 INTRODUCTION

03 INVESTMENTS AS FOREIGN POLICY INSTRUMENTS

07 SPORTS

12 CULTURE

15 AIRLINES

19 PORTS

22 MEDIA

23 EDUCATION

26 REAL ESTATE

28 ENERGY

32 CONCLUSION

2 INTRODUCTION

he Gulf countries differ from other Dhabi, Dubai, and Doha in a race over the dis- Middle Eastern countries with their tribution of economic resources among them- T high economic incomes and relatively selves. It must be said that the royal families low population. Despite their high who rule these cities and emirates and indi- economic incomes, there is no rich diversity viduals who have close relations with the royal ahead of the Gulf countries in terms of eco- families also struggle to get a share from this nomic resource diversity. For this reason, the race. issue of diversifying the economic resources of the Gulf countries is of critical importance. INVESTMENTS AS FOREIGN POLICY The development of tourism, the establishment INSTRUMENTS of various cities in the countries as financial Increasingly, the Gulf countries are coming centers, and free trade zones summarize the to the fore in world politics with their interna- strategies of diversifying the economic resources of the Gulf countries. In addition to tional investments. These countries have in- Riyadh, cities such as Doha, Abu Dhabi, and ternational investments in sports, culture, air- Dubai are said to have emerged as financial, lines, ports, media, networks, education, real commercial, and tourism centers in the last estate, and energy. Saudi Arabia, UAE, and decades. Not only are these cities an object Qatar, the countries with the largest investment of economic development, but also the rulers and development funds in the Middle East, and residents of these cities have a role in di- use these funds as generously as possible in versifying economic resources. In this context, the field of international investment. Undoubt- Saudi Arabia, the United Arab Emirates (UAE), edly, there are other sub-categories where in- and Qatar are leading economies in the Gulf ternational investments are made. However, region in terms of regional and international there is also a political dimension to the inter- competitiveness. Not only are Riyadh, Abu national investments of the Gulf countries in

3 REPORT 26 Investments as Foreign Policy Instruments: The Cases of Saudi Arabia, The UAE and Qatar January 2021

the areas mentioned above. Providing details policy of this country. The first of these is to of technical investment that does not include shape the policies of the Gulf countries towards a political dimension is likely to not give an global actors such as the US, Britain, Germany, idea about the foreign policy objectives of the France, Russia, and China or to have a guiding countries. effect on this. To be more precise, the Gulf countries aim to buy the foreign policy of While for many years the Gulf states spent those countries with the investments they their revenues from natural resources on their make in these countries. In that sense, the internal development, they also transformed UAE President Sheikh Khalifa bin Zayed al the revenues into international investments. Nahyan presides over a real estate empire in While it has been observed that these initiatives London, and Saudi Crown Prince Mohammed have increased in recent years, the basic mo- bin Salman purchases cutting-edge technology tivation of these investments has become an equipment and top-of-the-line luxury real increasingly discussed topic. Although their estate in Western countries. main objectives are expressed as “economic diversification,” it can be seen that the motivation The second dimension is “Inter-GCC rivalry.” behind the investments made by the Gulf By making international investments, the Gulf states at a global level, especially Western states aim to gain an advantage in competition countries, is mostly “foreign policy” centered. with each other. In other words, Gulf states are entering an investment race by using their It can be argued that the Gulf states’ instru- financial resources to stand out in their com- mentalization of international investments as petition with others. In this way and with this a foreign policy tool has three main dimensions. policy, Gulf states aim to portray themselves The first dimension can be formulated as as being in a more effective position than “buying foreign policy,” which means by in- other states, to gain prestige or to make them- vesting in a given state, the Gulf Cooperation selves stronger in that area by preventing Council (GCC) actors aim to shape the foreign other states’ investments in these areas. The

Gulf royal family members, like Mohammad bin Salman, are also interested in French châteaux.

4 İsmail Numan Telci I Gökhan Ereli

race among the national airlines of Abu Dhabi, Investments made in the field of culture Dubai, and Doha is a race over who gets the include the modernization moves of the Gulf most influence among the GCC states. countries and efforts to create a national identity. As a strategy to support, strengthen, The third dimension can be formulated as, and embellish the cities and emirates that “regional competition over influence.” Another have been seen as financial centers, the cultural aspect of the Gulf countries’ instrumentalization investments include museums, various historical of global investments in the context of foreign artifacts, and various projects. Cultural invest- policy is to hinder the countries they are com- ments are also compatible with the idea of re- peting with at the regional level. In the simplest vealing the past to shape the present idea of form, this situation occurs when a Gulf country the Gulf countries. signs an agreement in the field of ports management through the use of unofficial con- One of the areas where economic incomes nections with the government of that country are transformed into material advantages is to hinder a regional rival who has an investment the air transport race. The Gulf airline compa- plan in the field of port management in any nies, which have cutting-edge technology country, pushing the rival countries out of the equipment and fleets for a short time, became process. The Horn of Africa region is a clear the leading companies in the field. The race example of regional rivalry being played by of the countries, which have become the lead- the GCC states. Examples of this situation that ing companies of international air transport, can be found under the headings of the study also triggered international investments. In this such as energy, port management, airlines, sense, with the motivation to have large fleets think tanks, and real estate, and these will be and wide destination networks, airline com- discussed comprehensively. panies have signed various agreements. Just like investments in sports, Riyadh can be said In the sports section, partial and holistic in- to lag behind Abu Dhabi, Dubai, and Doha in vestments in football teams and companies this sense. The fact that Abu Dhabi and Dubai in sports activities are discussed mostly. While have different airline companies shows that investments in England and France stand out the competition in air transport takes place in the field of football, it should be seen that not only internationally and in the Gulf but the football investments of Abu Dhabi and also within the country. In addition to the in- Doha executives outperform Riyadh. In addition ternational investments of the three major to football, racing sports, cycling, and other airline companies of the Gulf, the airlines of sports branches have been handled in pro- other Gulf countries have a relatively low ca- portion to the size of the investments. In pacity of destination and investment. addition to permanent investments in different countries, there are some efforts to organize Ports constitute another important invest- sports events within the scope of the efforts ment area. The rental, acquisition, and restora- to renew the image of the Gulf. Investments in tion of ports in and outside of the Middle East the field of sports offer the political elites in are some of the important investment areas the Gulf countries the opportunity to establish for the Gulf countries. Ports are not merely a tight bond between the political and business economic investments. The facilitation of mar- circles in the country where investments are itime trade and the implementation of geopo- made. litical strategies can be achieved with a strong

5 REPORT 26 Investments as Foreign Policy Instruments: The Cases of Saudi Arabia, The UAE and Qatar January 2021

position on ports. For this reason, ports are of that the public refuse the support from these particular importance among international in- countries. Thus, the field of education signified vestments in terms of their political implications. one of the points of tension between the Gulf Ports can enable more than one strategy to and Western countries. be implemented at the same time. While main- taining the position of the ports in the country Real Estate is an area where individual, in maritime trade, the capacity of the ports commercial and permanent investments are owned abroad can also be reduced. Therefore, made. Investments in a property located on ports should be regarded not only as an area expensive streets and avenues particularly of international investment but also as a geopo- noticeable in European capitals. Often, invest- litical element. ments in housing in European capitals are kept confidential and not shared as an official Investments that have political implications record. Property investments are revealed as much as the investments made in ports are through investigative journalism, just like ac- also realized in the field of media. Establishing and supporting television channels and trans- tivities in the field of education. The real estate ferring funds to various projects are the most area is at the forefront of the areas where the basic media investments. Media investments individual investments of royal family members are critical in terms of framing how investments and business people in the Gulf countries are in all other fields are explained to the world. most common. If we look at the prominent in- There were media-related clauses in lifting vestment cities here, London, Manchester, the embargo on Qatar that caused the Gulf Washington, New York, Los Angeles can be crisis in 2017. Blockading state stipulated that given as examples. Qatar should abolish the Al-Jazeera media Finally, the investments of the Gulf countries network. in the field of energy should also be seen of Like investments in media networks, the considerable importance and their details field of education is also about creating per- should be associated with political issues. In ception. Establishing exchange programs and addition to petroleum and petrochemical prod- providing funds to various programs and proj- ucts, natural gas and liquefied natural gas in- ects form the basis of education investments. vestments constitute only a part of energy in- Similar to the investments in sports, it can be vestments. Energy investments have to include said that England stands out in the field of ed- port investments and other types of investments ucation. However, the most important institu- in most countries. Dam construction, irrigation tions where more investments are made is lo- projects, power station construction, and cated in the US. Many different educational restoration projects constitute the main energy institutions in many different states in the US have received projects, funding, and support investments. In addition to all these, investments from the Gulf countries. However, these funds also include cooperation. The reason for this and the close relationships brought by these is the scarcity of arable land in the Gulf countries funds are often the subjects of research by in terms of agriculture. It is understood from the countries where the investments are made. the majority of certain projects that are essential Prominent newspapers in the US and the UK for rural areas outside the capitals of the Gulf covered this issue many times and suggested countries.

6 İsmail Numan Telci I Gökhan Ereli

St. James’ Park, Newcastle upon Tyne

SPORTS sports events, and then more permanent investment opportu- Having been exposed to a nities followed with the wider in- lack of qualified population, po- vestments portfolio. litically prominent Gulf states crave more and more interna- Gulf states Saudi Arabia, UAE tional recognition and global vis- and Qatar wish to attract sports ibility in the 21st century. For two activities to their countries, first Manchester City decades, that nascent urge to of all, to show that their countries has been become more visible regional are not “remote places and managed by players is said to grow stronger. strange locations”. Due to their Abu Dhabi That led the Gulf states to use financial opportunities integrated United Group their financial resources and in- with the global economy, besides since 2008, PSG struments abroad more effec- attracting sports activities to their has been tively. Since their engagement countries, announcing their administered by with the Western countries, par- names abroad also constitutes Qatar Sports ticularly with the US and Britain, the very basis of investment Investments have been established robustly strategies. Therefore, as a primary since 2011. already, the preference of and strategy, Gulf states have been tendency to decide where the interested in buying stakes in Eu- money will be spent has been ropean football clubs, they have somewhat easy for the Gulf states. particularly invested in English To acquire more visibility in the Premier League (EPL) and France eyes of global media and there- League 1 clubs to a large extent. fore tying up business possibilities The UAE and Qatar have been with the Western countries, the familiar with and are known for Gulf embarked on investing in their grand investments in fore-

7 REPORT 26 Investments as Foreign Policy Instruments: The Cases of Saudi Arabia, The UAE and Qatar January 2021

runners Manchester City and Paris Saint Ger- terms of a minority or majority shares.5 For this main (PSG) in both European leagues. While reason, it can be said that almost every conti- Manchester City has been managed by Abu nent has football teams owned by the Gulf Dhabi United Group since 2008, PSG has been countries. The share values, transfer budgets administered by Qatar Sports Investments and other revenues of the purchased teams since 2011. have also incrased with the sheikhs from the Gulf coming to rule the clubs. As a kind of One of the major institutions in the Gulf in strategy, the policy of transferring successful terms of sports investments is Abu Dhabi players has been followed. For example, Brazil- United Group for Development and Investment.1 ian superstar Neymar transferred from Besides Manchester City, another investment Barcelona to PSG for 222 million euros, going of Abu Dhabi United Group has been to acquire down in history as the biggest transfer payment an 80% stake in Major League Soccer’s (MLS) ever made.6 New York City.2 Along with Manchester City and New York City, Abu Dhabi United Group Besides Abu Dhabi, Dubai leadership also also purchased a 100% stake in Melbourne considers sports investments, both inside and City FC of Australia, and Emirati entrepreneur outside of Dubai, as a sector in the emirates’ Khaldoon Al Mubarak became the head of economy. Besides football investments, sports the club.3 Khaldoon Al Mubarak also “admin- investments in Dubai are diverse. In fact, looking isters club in the UK, US, Australia, Uruguay, at the situation of sports activities in the sector will summarize this. In 2015, Dubai’s gross ex- India, Spain, and Belgium”.4 In addition to flam- penditure in the sports economy is character- boyant stock purchases, there are many other ized by $270 million worth of golf tourism.7 sports investments with low media coverage. Sports investments have been carried out not Saudi Arabia has been relatively late to this only in Europe but also in the US, Asia, and race in this respect, pacing around EPL clubs Australia. Ensuring cash flow, introducing the Sheffield United, Manchester United, and New- Gulf countries and financial might of the ruling castle United. Until February 2020, the Saudi families, and establishing financial networks leadership has succeeded in buying only the are the most important objectives of these in- whole stakes of Sheffield United. Negotiations vestments. In addition to all these, Yokohama for the acqusition of Newcastle United have F. Marinos from Japan, Montevideo City Torque continued for a long time. Along with the New- from Uruguay, Girona from Spain, Sichuan Jiuni castle United issue, the long-awaited purchase of Manchester United by Saudi Crown Prince from China, Mumbai City from India, and Lom- Mohammed bin Salman, in turn, is stalled now. mel SK from Belgium, have all signed an agreement with Abu Dhabi United Group and Along with investments in football, Gulf City Football Group owned by the former, in states are home to global initiatives and make

1 Simeon Kerr, “Abu Dhabi investors buy Manchester City”, Financial Times, 2 September 2008 2 Mark White, “Which football clubs do Manchester City’s City Football Group own?”, Four Four Two, 12 May 2020. 3 “Has Abu Dhabi United Group $1 Billion Sports Investment Paid Off?” Arab America, 28 March 2020. 4 Emre Asikci, “Footbal giants want to dominate, control, act free”, Anadolu Agency, 25 July 2020. 5 White, “Which football clubs do Manchester City’s City Football Group own”. 6 Julien Laurens, “Neymar: How the record-breaking €222m move to PSG unfolded”, The Guardian, 4 August 2017. 7 “Dubai sports industry worth more than $1.7 billion a year”, The First Group, 1 November 2015.

8 İsmail Numan Telci I Gökhan Ereli

an effort to portray themselves as being capable at the disposal of the Crown Prince. Aiming to of handling worldwide projects. Therefore, FIFA create an image that presents Saudi Arabia as 2022 World Cup, influential boxing games, im- the embodiment of “moderate Islam”, a West- portant racing platforms are inviting people to ern-friendly and reformist country, Mohammed the Gulf, rendering the Gulf states capable bin Salman made efforts to become the owner and renunciant in this respect. of Newcastle United, one of the English Premier League teams. The interest of the Gulf countries It is no wonder that the Saudi princes are in European football clubs is not something living in luxury. No wonder are Saudi princes new. Considering that Qatar owns the French living in luxury. However, many Saudi princes club, PSG through Nasser Al-Khelaifi and the have been criticized for the seemingly reckless UAE is the owner of the English club, Man- uses of their financial resources. The remarkable chester City, through Mansour bin Zayed Al amounts of money that they spend over and Nahyan, it can even be held that Saudi Arabia over play an important role in understanding failed to swiftly join this race of increasing its the financial balances in the royal family as well as in revealing how the Saudi princes live visibility with football. With the emergence of in luxury. Trends concerning the use of financial a deficiency in this direction, plans for the in- resources within the royal family can show us vestments in to the UK clubs gained momen- that the Al Saud family has gradually moved tum. away from the ability to empathize with the The Saudi Arabian Public Investment Fund living conditions that people have to experience (PIF), worth $320 billion8, would reportedly and that the nuclear family has started to be- fund the purchase of Newcastle United, and come isolated in the royal family due to both in case of a possible purchase, Saudi oil giant economic and political problems. Indeed, the ARAMCO’s Chairman Yasir bin Osman Al-Ru- strategic mistakes in recent foreign policy pref- mayyan would allegedly be the head of the erences and the developments in the country club.9 Although time will show whether Yasir brought about international criticism aimed at bin Osman Al-Rumayyan will be a new Nasser Saudi Arabia. The reactive moves, which serve Al-Khelaifi or Sheikh Mansour bin Zayed, Mo- as a continuation of the loss of prestige, led to hammed bin Salman’s interest in Newcastle the disagreements between the royal family United constituted another example of a costly and religious authorities and the emergence expenditure by the Crown Prince. Besides, if of some discomfort in the family. All these the purchase takes place, both Mohammed reasons prompted further research into how bin Salman’s effectiveness with the PIF will in- the royal family uses financial resources. crease and his influence in the shrinking deci- In this sense, one of the issues that the sion-making mechanism will be much stronger. Crown Prince of Saudi Arabia, Mohammed bin Hence, given that the Crown Prince could rely Salman, has brought to the agenda in recent on his narrower and closer circle that emerged times, is that he spends an astronomical amount following the reassignments10 made in the of money. It is clear that both the royal family Saudi Arabian cabinet in August 2019, Yasir and the state have extreme financial resources bin Osman Al-Rumayyan is likely to take over

8 “Public Investment Fund of Saudi Arabia (PIF)”, Sovereign Wealth Fund Institute. 9 Jason Burt, “Newcastle United set for businessman Yasir al-Rumayyan as chairman if deal is reached with Saudi-backed consortium”, The Telegraph, 27 January 2020. 10 Ahmed Al Omran and Andrew England, “Saudi Arabia announces sweeping changes to cabinet” Financial Times, 27 December 2018.

9 REPORT 26 Investments as Foreign Policy Instruments: The Cases of Saudi Arabia, The UAE and Qatar January 2021

this possible task. A recent development about along with the English clubs. Both the insistence the purchase of Newcastle United came in on Manchester United and the recent situation the middle of April. Al Jazeera stated that Mo- regarding Newcastle United revealed the ap- hammed bin Salman’s investment group is peal of the Saudi Arabian royal family in allo- closer to take percent ownership of Newcastle cating financial resources to the princes and United. It has been stated that the owner of led some certain financial tendencies to be the club, a British billionaire Mike Ashley, re- noticed. Given the situation of the royal family duced the price to $378 million from an initial of Saudi Arabia, the financial resources of the 11 $425 million due to the coronavirus crisis. If princes, which came to the agenda with their the deal succeeds, Saudi Investment Fund interest in English football clubs such as New- would take 80 percent, British financier Amanda castle United and Manchester United, should Staveley will take 10 percent, and billionaires be examined seriously. To this end, it is nec- David and Simon Reuben will take the other essary to first focus on the total wealth of the 10 percent, according to Al Jazeera. royal family and the size of the financial re- One reason for the phenomenon of the sources belonging to the princes. Data do not visibility and gain of prestige thanks to the seem to be sufficient on what the royal family’s sports clubs that continue with Newcastle population is and which financial resources it United is that Mohammed bin Salman intends controls. Although it is obvious that there are to pay £3.5 billion12 to the Glazers family which difficulties in revealing the said numbers, the owns Manchester United. It is conceivable that worth of the royal family of Saudi Arabia is es- the Manchester United adventure, which has timated to be running at around 1.4 trillion been postponed and largely abandoned as a dollars and quite possibly above.13 Considering result of the Glazer family’s indifference to that the members of the royal family, other such a purchase, has given its place to the than the core members, receive a share of purchase of Newcastle United, which stands wealth per their proximity to the family, the fi- out to be a relatively more realistic target. In- nancial power that the King and Crown Prince deed, the conduct of this purchase will not have in their personal lives can be estimated. provide Saudi Arabia with its first football club While one reason for costly spending is to in England. We may say that Saudi princes do increase their influence, another is the desire not get along very well with the English clubs to establish close links between Saudi Arabia’s except for the fact that Prince Abdullah Bin leadership and business circles in Western Mosaad Bin Abdulaziz Al Saud obtained, countries thanks to the amount of the trans- through court ruling last year, the other 50% action. In this sense, it has been revealed that of Sheffield United, another English football Saudi Arabia would pay €120 million to the club, that he had not had before. Spanish Football Federation for the holding The reaction of the English public to Saudi Spanish Super Cup final games in Riyadh for Arabia’s activities in the international arena is three years. Also, €15 million14 have been paid a significant factor for Saudi princes not getting so that the Dakar Rally could be organized in

11 “Saudi-backed takeover of Newcastle United edges closer” Al Jazeera, 15 April 2020. 12 “Trillionare Saudi Arabian Prince Mohammad Bin Salman ‘desperate’ to buy Manchester United despite Newcastle links”, Fox Sports, 3 February 2020. 13 Ruth Umoh, “This royal family’s wealth could be more than $1 trillion” CNBC, 18 August 2018. 14 Murat Keleş, “Suudi Arabistan bozulan imajını spor organizasyonlarıyla düzeltmeye çalışıyor” Anadolu Ajansı, 16 December 2019.

10 İsmail Numan Telci I Gökhan Ereli

The Dakar Rally

Saudi Arabia as of 2020. It was Western countries. If one of the also announced that the amount closest examples of these ex- paid for a boxing competition to penditures succeeds, Saudi Ara- be held in Diriye reached $100 bia will conduct the purchase of million. The organization of sports Newcastle United via PIF. activities in Riyadh and neigh- There have been unexpected boring cities both contributes to developments as a result of the the country’s tourism and also initiatives that have continued for provides Riyadh leadership with almost 3 years. The consortium, an opportunity to demonstrate €15 million in which PIF held a majority stake, their so-called efforts to change have been paid gave up buying Newcastle United and transform Saudi Arabia. so that the at the end of July. The PIF’s official Dakar Rally As can be understood from institutional identity as a govern- could be the abovementioned development agency, its administration organized in ments that the investments made by the Crown Prince Mohammed Saudi Arabia as with remarkably large amounts bin Salman, and other entangle- of 2020. of money play a role in changing ments have prevented the con- the agenda in such a way as to sortium to take over Newcastle cover the problems that Saudi United’s ownership. Among the Arabia faces both inside and out- entanglements are Saudi Arabia’s side. In addition to this very aspect human rights record and the dis- of the large financial expenditure, membering and murdering of another reason behind the high- Khashoggi, which represent the cost investments is the creation major ones. One of the develop- of the image of Saudi Arabia, ments that worried the consor- through financial power, as an tium was the Premier League’s indispensable partner for the claim that Saudi Arabia did not

11 REPORT 26 Investments as Foreign Policy Instruments: The Cases of Saudi Arabia, The UAE and Qatar January 2021

comply with the requirements of the decision in cycling is the UAE. As late as 2017, it was taken by the World Trade Organization regarding announced that the UAE would preside over a beoutQ. Concerning the matter, WTO had cycling team through Emirates Airlines being ruled that the “Saudi state had breached in- its sponsor17. The UAE Team Emirates, as a tellectual property rights” by not tackling piracy. sign of growing interest in various sports in- However, despite the strong reactions of all vestments, won the Tour de France, one of relevant persons and institutions, in September, the preeminent races in the world.18 The winning it was alleged that negotiations were held be- team, whose funding is provided by the UAE tween Saudi officials and other members of for three years, added value to the UAE strategy the consortium, Amanda Staveley and Reuben to “expanding sports diplomacy and soft pow- Brothers, to stimulate the takeover process in er.”19 a way that the UK government would welcome. However, in a new series of developments, CULTURE Newcastle United in the middle of September As part of creating a “national identity” other has taken legal action against Premier League than merely emphasizing Arabness, Gulf states over the blocked Saudi purchase. The club’s are spending a lot of money to build museums president Mike Ashley has accused the chief and monuments to demonstrate national her- executive of the Premier League, Richard Mas- itage and also are making investments, par- ters of not acting appropriately in the process ticularly in Europe to maintain this posture. leading up to the PIF’s withdrawal from bidding.15 In addition to purchasing stakes of football Qatari identity, Emirati identity, and Saudi clubs in every corner of the world, the Gulf identity are put forward as trajectories to be countries stand out in the field of sports by or- strengthened by the purchases of art pieces ganizing grand sports events. One of these and the occupation with art. sports activities is the 2022 FIFA World Cup Particularly as Michael B. Greenwald has that is to be held in Qatar. reiterated, Gulf countries are competing for 20 Cycling is another sports arena in which influence in arts. The competition between Gulf states are competing. In terms of cycling, the Gulf countries for influence in arts is tran- the Bahraini royal family is known to endorse spired by moving valuable art pieces and cul- and sponsor professional cycling teams and ture created by arts to the heart of the Gulf. cyclists. Reportedly, Prince Nasser bin Hamad Greenwald points to a new set of artists who Al Khalifa, who is a known young cyclist in the are willing to shoulder responsibility for the Gulf is said to have provided sponsorships to arts to be carried to the Gulf, Abdulnasser Vincenzo Nibali and his group of riders.16 An- Gharem from Saudi Arabia, Abdullah al Saadi, other Gulf state that is competing for influence and Hassan Sharif from the UAE and Wadha

15 Ed Aarons, “Newcastle taking legal action against Premier League over blocked Saudi buyout”, The Guardian, 14 September 2020. 16 Stephen Farrand, “Nibali linked to new Bahrain-sponsored team for 2017”, Cycling News, 21 February 2016. 17 “With new backer, UAE Team Emirates unveiled in Abu Dhabi”, VeloNews, https://www.velonews.com/news/road/new- backer-uae-team-emirates-unveiled-abu-dhabi/ 18 Joe Snell, “Team Emirates rider winds Tour de France as cycling gains legs in Middle East”, Al Monitor, 23 September 2020. 19 Snell, “Team Emirates rider winds Tour de France as cycling gains legs in Middle East”. 20 Michael B. Greenwald, “The New Race for Contemporary Arts Dominance in the Middle East”, Belfer Center for Science and In- ternational Affairs, Harvard Kennedy School, October 2018.

12 İsmail Numan Telci I Gökhan Ereli

National Museum of Qatar

al Suleati, Sophia al Maria, and effort of consolidating national Wafika Sultan Al-Essa from identity, the National Museum of Qatar.21 It is suggested that with Qatar is said to cost around an the efforts of these figures, the estimated $434 million.23 The Gulf states are making the arts a fact that Qatar has spent as much top priority for investment. The as $434 million and exerted a nationalities of art figures are in- decade-long effort on it shows The fact that dicative of nations that are willing that art is a way of creating influ- Qatar has spent to spend on art both in Europe ence. The museum serves both as much as $434 and in the Gulf, Saudi Arabia, the domestic and foreign policy ends million and UAE, and Qatar. in terms of consolidating identity exerted a internally and creating a sense As a demonstration of forging decade-long of potency abroad. effort on it and consolidating national her- shows that art is itage and identity in the Gulf, Along with domestic invest- a way of creating Qatar launched the National Mu- ments such as the National Mu- influence. seum of Qatar in 2018. In 2017 seum, Qatar has also spent a also, the same architect, Jean great amount of money to pur- Nouvel, helped create the Louvre chase art pieces and bring them in Abu Dhabi. Rowan Moore of to the heart of the country. David the Guardian suggests that the Batty of the Guardian has indi- opening of ostentatious museums cated that the Qatari royal family’s in these Gulf sheikdoms “signs a purchases of art pieces could hunger for identity”.22 For this amount to nearly $1 billion, over

21 Greenwald, “The New Race for Contemporary Arts Dominance in the Middle East”. 22 Rowan Moore, “How landmark building became weapons in a new Gulf war”, The Guardian, 21 July 2018. 23 “Nouvel’s desert rose finally blooms as Qatar inaugurates national museum”, France24, 28 March 2019.

13 REPORT 26 Investments as Foreign Policy Instruments: The Cases of Saudi Arabia, The UAE and Qatar January 2021

Mansour bin Zayed Al Nahyan’s ‘Topaz’ Yacht the last seven years.24 The nearly $1 billion Based on U.S. intelligence reports, the Wall amount refers to a strategy that seems to be Street Journal announced in 2017 that a Leonar- neat and aimed at impressing both European do da Vinci painting worth $450.3 million was capitals and policymakers. also purchased by the Crown Prince. However, In addition to the UAE and Qatar’s decade- afterward, speculations propounded about long efforts to come to the forefront in the art whether the bidder who paid $450.3 million scene by using their financial potential both at represented Mohammed bin Salman. There home and abroad, Saudi Arabia also joined were even such allegations that the bidder the art race. While in the UAE and Qatar, royal paid for the painting in favor of Abu Dhabi’s families and state transactions are ascertained, leadership. Another allegation was that the in the case of Saudi Arabia, certain figures in UAE Ministry of Culture and Tourism purchased the royal circles pop up as they have complete the painting to display it at the Louvre Abu access to the royal wealth. It is not an exag- Dhabi Museum. geration to say that the last 5 years of spending These purchases were made following an- in the royal family for arts have been carried out by the Crown Prince Mohammed bin nouncements that the Saudi treasury seized Salman in no small measure. It is suggested $100 billion from billionaires at the Ritz-Carlton that Mohammed bin Selman uses a private Hotel in corruption operations, which were company and the PIF for transactions. Addi- launched after the Crown Prince changed. It tionally, that private company also carried out was later revealed that the painting “Salvator transactions for the purchase of a $500 million Mundi” went to Saudi Prince Bader bin Abdullah yacht of a Russian businessman by Mohammed bin Mohammed bin Farhan al-Saud, a close bin Salman in 2015. ally of Mohammed bin Salman.25

24 David Batty, “The rise of Gulf art scene”, The Guardian, 16 April 2012. 25 Hilary Weaver, “The World’s Most Expensive Painting Sold at Auction is Missing, and the Louvre Abu Dhabi Isn’t Panicking” 9 January, 2019.

14 İsmail Numan Telci I Gökhan Ereli

flights, reaching as many as 150 destinations.27 While flying to over 150 destinations and having one the most advanced and largest fleet

Qatar’s National airline in the business, Qatar Air- carrier Qatar Airways AIRLINES ways also made a reputation by investing in other major com- With financially capable and panies in another place in the wealthy states, the Gulf region is world. steadily becoming one of the centers of the global aviation As the geopolitical tensions sector. As one of the newest cen- among the Gulf countries height- ters of aviation, the UAE and Qatar ened in 2014, Qatar Airways in- have come to the forefront in the tended to ensure the opening of last decades. Three giants in the a safe passage toward more in- aviation sector have been the vestment for more economic self- Three giants in Emirates, Etihad Airways, and reliance for Qatar. Therefore par- the aviation Qatar Airways, being known as ticularly after 2015, the Qatar Air- sector have been ME3 or the Big-3.26 Respectively ways investment abroad nearly the Emirates, founded in 1985, in 2003, and in doubled. Not only the 2014 Etihad Airways, 1997, these companies have be- geopolitical tensions and the and Qatar come prominent in the business Qatari leaderships’ trust in the Airways, being not only due to the magnitude prestige of Qatar Airways required known as ME3 or of their market share but also such investments but also the due to their fulfilling investments the Big-3. competition with Dubai and Abu abroad. Dhabi based airline companies required more investments to re- Founded in 1997, Qatar Air- main standing in the business. ways seems to have paved the way for Qatari entrance into the In doing so, in 2016, Qatar Air- global economy more than ever. ways bought a 10% stake in In a time when the Gulf countries LATAM in exchange for $613 mil- were making certain moves to lion.28 LATAM Airlines is based in integrate themselves into the Santiago, Chile and it is in part- global economy more than ever, nership with Brazil. It is also con- Qatar Airways began to serve sidered the largest airline com- both in domestic and international pany in Latin America with various

26 ME3: Middle East Three (Etihad, Emirates, Qatar Airways) 27 Akbar Al Bakar, Qatar Airways CEO, Qatar Airways Website. 28 Ben Lucky, “Qatar Airways Buying A %10 Stake In LATAM”, One Mile At a Time, 12 July 2016.

15 REPORT 26 Investments as Foreign Policy Instruments: The Cases of Saudi Arabia, The UAE and Qatar January 2021

branches in the continent across Argentina, through airline business required Qatar Airways Brazil, Colombia, Ecuador, Paraguay, and Peru. to enter into the Italian market as well. Before this major investment, Qatar Airways In 2017, along with its investments in other had bought another 9.99% stake in the Inter- parts of the world, Qatar opened a way of in- national Airlines Group (IAG) for nearly $1.7 bil- vestment to the Pacific. With this move, Qatar lion.29 The purchase of stakes in IAG also in- Airways completed the purchase of a 9.6% tended to improve the business relations be- stake in Cathay Pacific, for nearly $662 million, tween the British and Qatari businessmen, be- making Qatar Airways the first airline to invest cause British Airways is also a company under in an East Asian carrier.33 It is suggested that the IAG. The Qatari purchase of a 9.99% stake Qatar Airways tap into the Chinese air market in IAG did not remain in 9.99% and in May with this move, particularly as a rescuer in a 2016, Qatar Airways increased the owned stake time of Cathay Pacific announced a record by Qatar to 15%, being valued in total at $2.29 level of 82% drop in half-year profits in August billion. Finally in February 2020, with an addi- 2016.34 tional $600 million, Qatar Airways has increased its shares in the IAG to 25.1%.30 Besides this in- Just like the 2014 diplomatic spat between crease in the stakes, Qatar Airways CEO Akbar the Gulf countries and Qatar, the 2017 embargo Abbas Al Baker said the company is also eyeing against Qatar launched by Saudi Arabia, the to increase its share in LATAM and to work UAE, Bahrain, and Egypt, required Qatar to closely with fellow shareholder Delta Air Lines. improve its self-help strategies in the economy. Delta, another shareholder in LATAM took a In this sense, along with making investments 20% stake for nearly $1.9 billion.31 to another major airline, Qatar began to investments in certain international airports to Along with these investments in IAG and overcome the negative implications of the Latin American airline companies, Qatar also 2017 embargo. In the closing days of 2019, invested largely in other major/minor European Qatar Airways reach an agreement with Rwanda companies and airports as well. In 2016, Qatar to take a 60% percent stake in the new Buge- Airways bought a 49% stake in Italy’s second- sera airport in Rwanda in exchange for $1.3 largest airline, Meridiana.32 The reason why billion.35 The deal included renovating and en- Qatar invested in Meridiana is the motivation larging efforts for the Bugesera airport whose that having access to the Italian market, prob- maximum capacity of 4.5 million would not be ably through Doha-connected flights, would welcomed by Rwandan authorities. The Rwan- provide Qatar with a better chance to enter dan airport move could be explained as one into another busy international market. Another of the Qatari efforts to overcome the negative motivation could be that diversifying assets implications of the Gulf crisis in 2017, forcing and the need for diversifying the economy Qatar Airways to change most of its flight

29 Ben Lucky, “Qatar Airways Buys %9.99 Stake in British Airways Parent Company”, One Mile At a Time, 30 January 2015. 30 Paul Sandle and Alexander Cornwell, “Qatar Airways spends $600 million to lift stake in BA owner to %25”, Reuters, 19 February 2020. 31 Alexander Cornwell, “Qatar Airways swoops for RwandAir stake and eyes bigger LATAM holding” Reuters, 5 February 2020 32 Ben Lucky, “Qatar Airways Buys A %49 Stake in Money Losing Italian Airline With Ancient Planes” 14 July 2016. 33 “Qatar Airways buys %9.6 stake in Cathay Pacific”, BBC News, 6 November 2017 34 “Cathay Pacific profits plunge amid fierce competition, BBC News, 17 August 2016 35 “Qatar Airways to take %60 stake in Rwanda international airport” Al Jazeera, 10 December 2019

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routes since it cannot obtain permission to fly Also, an additional $150 million was spent on over the Saudi, Emirati, and Bahraini air spaces. another program of Jet Airways, which is Jet Privilege, totaling Etihad’s investments to Jet Along with investments in renovation and Airways $749 million. However, over the years enlargement initiatives in the international airport in Rwanda, Qatar Airways reached a deal the shares of Jet Airways have gone down to purchase a 49% stake in RwandAir, in ex- and with this plummeting trajectory Etihad change for an untold amount.36 Also in 2019, proposed to invest in 49% of the shares and Qatar Airways continued its moves in the Chi- the proposed deal is not actualized yet.39 An- nese market, striking a deal with China Southern other investment of Etihad was the purchase Airlines. By this move, Qatar Airways bought a of a 49% stake in Alitalia promising that it 5% stake in the airline which has a promising would spend on the Italian company almost future in the Chinese market.37 €700 million.40 With this investment move on the Italian company, Etihad signaled that the Abu Dhabi-based Etihad Airways had trig- European market is also important along with gered a new wave of competition in investments abroad when it purchased a 24% stake in Jet the Asian market. Along with investments in Airways of India in exchange for $379 million, airline companies, Etihad is the sponsor of the being one of the first investments to an Indian football stadium of English Premier League airline company after certain restrictions are club Manchester City. However, it is suggested lifted. 38 In addition to $379 million, Etihad in 2010 that the club is not funded by Etihad committed another $220 million to enlarge but it is funded directly by the Abu Dhabi gov- the partnership between Etihad and Jet Airways. ernment.41

Dubai-based airline carrier Emirates

36 Remy Darras, “Qatar Airways confirms purchase of %49 stake in RwandAir”, The Africa Report, 10 February 2020. 37 Dominic Dudley, “Qatar Airways Buys Into Fast-Growing Chinese Market, With One Eye On The Future”, Forbes, 3 January 2019. 38 “Etihad buys %24 stake at India’s Jet Airways for $379m”, The National, 25 April 2013. 39 “Etihad proposes to invest in Jet Airways at %49 discount” Arab News, 16 January 2019. 40 Ben Lucky, “Alitalia to Install New Business Class Seats and Wifi” One Mile At A Time, 1 May 2015. 41 David Conn, “Manchester City sponsorship covered by Abu Dhabi government, not Etihad” The Guardian, 17 February 2020.

17 REPORT 26 Investments as Foreign Policy Instruments: The Cases of Saudi Arabia, The UAE and Qatar January 2021

sponsorship deal signed by Ar- senal.

Along with “ME3” or the “Big- 3”, Saudi Arabian airlines Saudia are making moves to get a fair share of the Middle East aviation market. Mohammed bin Salman has expressed Saudi Arabia’s will to obtain a great market share in the business while also praising Emirates Stadium, Home of Arsenal, London. the UAE and Qatari airline companies’ efforts transforming the The investment strategies of Middle East.44 However, challeng- As early as 2006, Qatar and Etihad Airways are cen- ing ME3 would be extremely un- Emirates signed tered on the Asian market and likely for Saudia, particularly after a deal with the European market with invest- the COVID-19 outbreak that hits ments in airline companies. How- another EPL the business in the Middle East ever, the other playmaker in the hard. A Dubai-based company club, Arsenal, to Gulf aviation sector, the Emirates, plans to make an offer to Israir name its stadium has pursued a somewhat different Airlines. NY Koen Group con- and jerseys for 15 investment strategy than those firmed that a subsidiary company years in of Qatar and Etihad Airways. will try to close the deal. The exchange for Rather than heavily investing in subsidiary company, Aero Private GBP100 million. airline companies, Emirates in- Jet hopes to expand its services tended to make another invest- by purchasing Israir, and the com- ment. Just like Etihad Airways, Emirates also largely engaged pany has a lot of experience. It is with the football industry, partic- indicated that this announcement ularly with EPL. As early as 2006, is important because it is the first Emirates signed a deal with an- intention to acquire a company other EPL club, Arsenal, to name in Israel after the normalization its stadium and jerseys for 15 agreement. NY Koen Group, years in exchange for GBP100 which is interested in jewelry, di- million.42 In 2018, even the ex- amonds, private aviation, digital tension of the deal to 2023-2024 technologies, construction, and seasons cost Abu Dhabi nearly security is established in 2003 in GBP200 million ($280 million).43 Dubai by Ukrainian businessman This deal became the biggest Naum Koen.45

42 Emirates Web Site, www.emirates.com 43 Bill Wilson, “Arsenal and Emirates in £200m shirt sponsorship extension”, 19 February 2018 44 Zahraa Alkhalisi, “Can Saudi Arabia turn its airlines into a real rival to Emirates and Qatar?”, 12 March 2019. 45 “Dubai-based company plans to buy Israeli airline”, Middle East Monitor, 15 October 2020.

18 İsmail Numan Telci I Gökhan Ereli

Dubai’s Jebel Ali Port

PORTS talization of their ports and port cities. The fact that the Horn of Another geopolitical and fi- Africa countries require foreign nancial rivalry between Saudi investments and cash somewhat Arabia, the UAE, and Qatar, is the facilitated their path toward strik- struggle for influence over ports ing deals with the wealthy Gulf Saudi Arabia, the and port cities. Most of the Gulf states. Although Ethiopia re- UAE, and Qatar activities regarding ports are con- mained a land-locked country, are all eyeing centrated on the Horn of Africa. its geopolitical trajectory is hope- Ethiopia, It is suggested that ports around ful owing to its recent rapproche- the Middle East and particularly Somalia, ment with Eritrea, partially bro- in the Horn of Africa have been Djibouti, and kered by Saudi Arabia and the securitized and instrumentalized Eritrea to build UAE to gain another foothold in by Saudi Arabia, the UAE, and the area. Other than the Horn of ports and to Qatar in their foreign policies. The strike deals Africa countries, semi-au- main reason for the Horn to be tonomous breakaway regions in allowing them to implicated in their foreign policies Somalia such as Somaliland, rent already is that an influence over it allows Jubaland, and Puntland have also established ports the countries to enjoy a position become important due to their for further that is close to the Gulf of Aden recent renting strategies of their restoring. and Bab el Mandap, which have lands and ports, to the Gulf states, been the significant waterways primarily Saudi Arabia and the for maritime trade in the Middle UAE. The securitization of ports East. Horn of Africa countries also politicized the otherwise de- Ethiopia, Djibouti, Eritrea, and So- politicized cooperation areas such malia come to the fore because as fishing, shipping trade, and of securitization and instrumen- other areas. As the Horn geopol-

19 REPORT 26 Investments as Foreign Policy Instruments: The Cases of Saudi Arabia, The UAE and Qatar January 2021

DP World, London Gateway Port itics somehow made it necessary, Saudi Arabia, in the construction of military bases and in the UAE, and Qatar are all eyeing Ethiopia, So- restoring the ports in Berbera and Bosaso, the malia, Djibouti, and Eritrea to build ports and overall UAE interest in the Horn and particularly to strike deals allowing them to rent already in Somalia’s breakaway regions Somaliland established ports for further restoration. An and Puntland, is in no way in decline. important note is that Saudi Arabia, the UAE, Along with this, DP World has struck a deal and Qatar have carried out their activities in with Puntland, another breakaway of Somalia, the region through their naval companies. to restore and run the Bosaso Port which is lo- One such company is the Saudi Arabia cated at the east of Berbera Port. The deal in- Ports Authority that has been the responsible cluded 30 years of rights of renting in exchange body for these tasks with a budget of nearly for over $330 million to be paid by the UAE.47 $450 million. Another most well-known com- The UAE also made a deal with Eritrea on pany operating for the UAE is Dubai Ports renting the Assab port in 2015, which allows World (DP World) with total assets seeing as the UAE to have a force training ground for its high as $26 billion as of 2018. For instance, DP protracted military involvement in Yemen.48 World has acquired the rights of Berbera Port Although the UAE has other plans and projects of Somaliland for 25 years in exchange for in Djibouti and Somalia, the estrangement of $440 million.46 Also, the UAE is building a their relations with the UAE virtually precluded military base near Berbera Port for its geopo- the ports’ projects. DP World had run the Do- litical ambitions in the Gulf of Aden and the raleh Port in Djibouti, another strategic foothold Bab-el Mandeb Strait to be met more appro- near Yemen, but the UAE’s decision to operate priately. Although there could be interruptions the port under its capacity, made Djibouti sack

46 Maggie Fick, “Harboring ambitions: Gulf states scramble for Somalia”, Reuters, 1 May 2018. 47 Abdi Latif Dahir, “The UAE is expanding its influence in the Horn of Africa by funding ports and military bases” Quartz Africa, 11 April 2017 48 “UN Report: UAE, Saudi Using Eritrean Land, Sea, Airspace and Possibly Eritrean Troops in Yemen Battle”, UN Tribune, 11 February 2015.

20 İsmail Numan Telci I Gökhan Ereli

the deal and seize the port again. Also, with In early September 2020, DP World and the UAE’s deal with breakaway Somaliland on Caisse de Depot et Placement du Quebec Berbera and the seizure of the UAE’s reported agreed on $4.5 billion worth investment. The financial aid of $10 million to breakaway regions agreement is an extension of an existing joint strained the relations between Somalia and venture between DP World and a Canadian the UAE, further preventing the UAE invest- firm. With their wide reach, the two companies 49 ments in Somalian ports. have investments across North America, Latin Unlike the UAE, Qatar maintained profitable America and Asia Pacific. Reportedly, the new relations with Somalia recently. Besides, in cash flow of $4.5 billion are going to be used 2017 the Somalian government refused to part for diversifying sectors and regions, including ways with Qatar as part of 2017 blockade and Europe.51 opted to pursue cooperative engagements After the UAE and Isreal struck a normal- with Qatar. In 2019, Qatar Ports Management ization deal on 13th of August 2020, cooperation Company announced that it is going to build a new port in Somalia’s Hobyo city of Mudug between DP World and various Israeli firms region, creating a lifeline for itself over the have been augmented. An initial agreement Bab-el-Mandeb.50 The deal between Somalia has been reached between the Israeli Dover- and Qatar on Mudug region reinforcements tower company and Dubai Ports World on and building a port in Hobyo is said to initially shipping activities. DP World Chairman Sultan cost around $170 million, however it is not Ahmed bin Sulayem stated that there is now a confirmed by officially. It is clear that as one consensus between the two countries on the areas on which Saudi Arabia, the UAE and building trade routes that will help both coun- Qatar have been spending money, the ports tries as well as the region. 52 The agreement have been the one that have the most impli- includes but does not give any specific road cations strategically. map on the following; the privatization of Israel’s Haifa port and a direct shipping route between the port of Eilat in Israel and Jebel Ali port in Dubai. Also, various memorandums of understanding have been signed between Israeli banks and DP World, capitalizing on the facilitation of developing ports and trade finance. For instance, Israeli bank Leumi have reached an agreement with DP World for abovementioned tasks and the bank also has struck a memorandum of understanding with the UAE’s First Abu Dhabi Bank and the Emirates Dubai’s Jebel Ali Port NBD bank of Dubai.53

49 Harun Maruf, “Somalia Seizes Nearly $10M From UAE Plane in Mogadishu” VOA News, 8 April 2018. 50“Qatar to build new port in Somalia’s Hobyo” Al Jazeera, 20 August 2019 51 Aaron Kirchfield, “DP World, Canada Fund Plan $4.5 Billion of Port Investments”, Bloomberg, 3 September 2020. 52 Abdelraouf Arnaout, “Israeli firm signs cooperation deal with DP World”, Anadolu Agency, 16 September 2020. 53 “Israel’s Bank Leumi, Dubai’s DP World to explore regional shipping cooperation”, The Times of Israel, 21 September 2020.

21 REPORT 26 Investments as Foreign Policy Instruments: The Cases of Saudi Arabia, The UAE and Qatar January 2021

MEDIA for keeping the wheels of propa- ganda and manipulation ma- After the UAE and The need to reflect on the chines running. In 2010, particulary Isreal struck a Arab street as a gate for the wider the penetration of Telegram, Twit- normalization world needs a control over finan- ter and Facebook platforms into deal on 13th of cial resources of media. Investing the scene of revolutions, irritated August 2020, in media assets has a growing the Gulf monarchies and required cooperation importance in the foreign policy them to make smart investments between DP of the Gulf states. Along with in- into social media trolls who are World and vesting in media assets, the media basically furthering the govern- is increasingly instrumentalized various Israeli ments’s agenda at any cost and in the foreign policy of Gulf states. in any situtation. Hence, with the firms have been For instance in 2017, one of the 2014 and 2017 geopolitical frac- augmented. An 13 demands issued by the tures in the GCC between Saudi initial agreement blockading countries was the Arabia, the UAE and Qatar, alle- has been reached shutting down of Al Jazeera which gations have been made about between the would drastically minimise the respective efforts of manipulating Israeli Qatari influence over the Arab media. In the 2017 crisis also, the Dovertower world that has been gained via UAE reportedly hacked the Qatar company and media. News Agency and spread prop- Dubai Ports World aganda as if the agency is talking on shipping Most of the time it could be on behalf of Qatar’s Emir Sheikh activities. suggested that the Gulf invest- Tamim bin Hamad Al Thani.54 ments in media outlets and tv While Saudi Arabia and the UAE channels abroad are carried out are pouring millions and millions

Saudi, Emirati and Qatari newspapers

54 Kristian Coates Ulrichsen, “The coup that never was: How a disinformation campaign created the illusion of political chaos in Qatar, Responsible Statecraft, 7 May 2020

22 İsmail Numan Telci I Gökhan Ereli

to tilt Qatar’s image, Qatar also tried to ward are based in the UAE, signifying a close rela- off the negative implications by having done tionship between Saudi Arabia and the UAE in the same with the Saudi-UAE. For instance, in terms of the shared perks of a pro-Saudi and 2019 a pro-Saudi Arabia and the UAE media pro-UAE coverage in the Middle East.57 A outlet Arab News claimed that Qatar is ma- branch of Qatar Investment Authority, Qatar 55 nipulating American media for its interests. Holding is the third-biggest investor in French In using financial wealth as an investment media company Lagardère Group with a 13% and sometimes as a way to gain influence stake. Other shareholders are media group over rivals, Saudi Arabia and its activities are Vivendi (23.5% of stakes) and activist fund dubbed “chequebook diplomacy”, meaning Amber (20% of stakes). channeling funds to media to tilt the narratives. Even, Reporters Without Borders claimed that EDUCATION various Saudi ambassadors themselves have Just like media, education also constitutes reportedly used financial leverage for creating a greater part of the narrating issue. In this a better image of Saudi Arabia where they are sense, Gulf states heavily invest in particularly based. At least in Senegal and the South the U.S. and British universities and centres African Republic, Reporters Without Borders under the universities. But recently the ad- argued that the Saudi ambassadors “suggested venturist foreign policies of Gulf states and paying journalists” various amounts regularly their human rights records have caused a in exchange for a pro-Saudi coverage.56 growing dissatisfaction with the funding in the Saudi Arabia is also making media invest- eyes of public image. One critical quite har- ments in Abu Dhabi and Dubai. For instance, rowing event was the killing of Jamal Khashoggi Saudi owned MBC and OSN media institutions in Saudi Consulate in Istanbul, October 2nd

US universities are also home to large Gulf investments

55 Ben Flanagan, “Exposed: How Qatar manipulates American media” Arab News, 15 April 2019. 56 “How Saudi Arabia manipulates foreign media outlets”, Reporters Without Borders, 9 June 2015. 57 “Saudi Arabia profile – Media” BBC News, 25 February 2019.

23 REPORT 26 Investments as Foreign Policy Instruments: The Cases of Saudi Arabia, The UAE and Qatar January 2021

Table 1: Funding and gifts from the Gulf to the US and Europe in the last decade

University or college Location Amount of Fund Funder

George Washington University Washington, DC $73.7 million Saudi Arabia

George Mason University Fairfax, VA $63.1 million Saudi Arabia

Tufts University Medford, MA $41.9 million Saudi Arabia

University of Kansas Lawrence, KS $27.3 million Saudi Arabia

Northwestern University Evanston, IL $14.4 million Saudi Arabia

Eastern Washington University Cheney, WA $13.1 million Saudi Arabia

NY Institute of Technology NY City, NY $12.3 million Saudi Arabia

Ball State University Muncie, IN $10.2 million Saudi Arabia

Texas A&M University College Station, TX $9.3 million Saudi Arabia

Texas A&M University College Station, TX $285 million Qatar

Carnegie Mellon University Pittsburgh, PA $300 million (over) GCC

Cornell University Ithaca, NY $60 million (approx) GCC

MIT Cambridge, MA $100 million (approx) GCC

University of Exeter Great Britain £8 million UAE

London School of Economics London £5.8 million UAE

London School of Economics London $11.5 million UAE

Harvard Cambridge, MA $50 million (approx) SA,UAE,Qatar

Yale New Haven, CT $375 million SA, UAE, Qatar

Georgetown University Washington, DC $415 million Qatar

2018, casting doubt on Gulf money that is As part of a recent escalation of tension channelled toward Western universities. Another between Western universities and the Gulf, event was the detention of Matthew Hedges, Harvard chose to cease one of its fellowship a British Durham University PhD student, by programs with Crown Prince Mohammed bin the UAE on charges of spying.58 Salman’s charity organization. It has been said

58 Richard K. Lester, “Letter to MIT faculty regarding engagement with Saudi Arabia”, MIT News Office, October 22, 2018.

24 İsmail Numan Telci I Gökhan Ereli

LSE is one of the leading UK universities that attract Gulf countries’ interest that 37 U.S. universities received $354 million propriately about $375 million funding. Like from Saudi Arabia or from the governmental Yale, Harvard has been funded by the Gulf institutions in this decade and $62 million of states extensively over the years. that $354 million were channelled as gifts In 2019 also, the DOE had opened another from Saudi kings and their companies.59 Ac- investigation into Georgetown University and cording to AP news’ data the universities that Texas A&M University over the fact that these have obtained the most fund from Saudi Arabia can be shown via a table. universities failed to disclose foreign gifts and funds that exceed $250,000. It has been indi- Saudi Arabia and the UAE funding are par- cated that the Georgetown received over $415 ticularly visible in the US and in Britain. A million in foreign gifts and funds, most of which funding could take many forms from providing came through a partnership with the Qatar scholarships to financially supporting specific Foundation.62 Another source claims that programs. Recently the Gulf funding came into Georgetown University received approximately focus in the US with an investigation into such $333 million from Qatar, making it top US uni- notable institutions as Harvard and Yale. The versity in receiving funds and gifts from Qatar.63 US Department of Education launched a probe60 into Harvard and Yale on suspicion of unre- According to Texas A&M University’s data, porting foreign gifts from Saudi Arabia, the the school received over $285 million in foreign UAE, Qatar and China.61 Reportedly, the Uni- gifts and funds since 2014, again thanks to a versity of Yale has not informed the DOE ap- partnership with the Qatar Foundation.64 Along

59 Collin Binkley and Chad Day, “Amid global uproar, some US colleges rethink Saudi ties,” AP News, October 30, 2018. 60 “US Department of Education Launches Investigations into Foreign Gifts Reporting at Ivy League Universities” Department of Education, 12 February 2020. 61 “Harvard and Yale ‘failed’ to disclose millions in donations from Gulf states, China,” Middle East Eye, 13 February 2020. 62 “US looking into university funding from Qatar and other outside sources,” The National, 15 June 2019 63 “How Qatar is paying US institutions $1.3 billion to gain ‘dubious influence’, Al Arabiya, 19 December 2018 64 “How Qatar is paying US institutions $1.3 billion to gain ‘dubious influence’.

25 REPORT 26 Investments as Foreign Policy Instruments: The Cases of Saudi Arabia, The UAE and Qatar January 2021

with funding the US universities regularly, and fundings that date even back to before Qatar is also funding the UK universities to a the 2000s. 67 wide extent. However, the Gulf fundings may not always be welcomed by the US and UK REAL ESTATE societies. In 2017, a group of British MPs raised The real estate sector investments by the their concerns about Britain universities’ rela- Gulf states particularly in the U.S. and in Britain tions with the Gulf donors. The MPs have refers to the fact that these states use this argued that millions of funds pouring into the tool as a -profit generating mechanism- But, British universities are used for establishing there is another story here. Gulf states invest Middle East related centres, and therefore in real estate, not only demonstrating their fi- used for creating influence on the side of nancial power but also creating a bond with Saudi Arabia, Qatar and Kuwait.65 policymakers and important figure where the real estate holdings are based. The Financial Times reported that the Gulf Cooperation Council (GCC) states have spent Apart from the fact that the high-cost sports as much as $2.2 billion for influence in Western competitions are held in Riyadh and the Riyadh universities between 2012 and 2018 and a leadership has sports clubs in Europe, another billion fund was paid by Qatar, $580.5 million important sector where financial resources are by Saudi Arabia and $213 million by the UAE.66 allocated is the real estate industry. In 2015, While recent donations and fundings could before being declared the Crown Prince, Mo- be understood in a context of creating influence hammed bin Salman bought the $300 million and the need to have a greater relations with Chateau Louis XIV in Louveciennes in France, Western policymakers, there are also donations which sheds light on the size of the financial

Mayfair is one of London's hot spots for real estate investors from the Gulf region

65 Camilla Turner and Harry Yorke, “Exclusive: MPs demand British universities stop accepting donations from dictatorships” The Telegraph, 13 August 2017. 66 Andrew England and Simeon Kerr, “Universities challenged: scrutiny over Gulf money” Financial Times, 13 December 2018 67 “Universities challenged: scrutiny over Gulf money”.

26 İsmail Numan Telci I Gökhan Ereli

power which the Crown Prince people and university staff. But possesses. Chateau Louis XIV he started his academic life in has been reported many times February 2011 with L. A. Mission to be the “most expensive home College. Students in this college in the world”.68 The given home were mostly Latino and consid- was purchased through shell ered to be food-insecure, and companies that are registered in college was far away from where France and Luxembourg and he lived. It is not clear why he owned by Eight Investment Com- chose this college. There are pany. Eight Investment Company many expenditures that have is allegedly a company that in- been kept out of the record (es- vests in accordance with the pecially with The Beverly Hills Sheikh Khalifa “needs” of the royal family of Rent-A-Car). With the amir’s has many Saudi Arabia and especially Mo- mother, Qatar invested money in properties in hammed bin Salman. universities in the USA. Thomas Barrack arranged meetings be- London’s most It is rumored that a mansion tween Sheikha Moza and the Uni- prestigious for the Royal the Al-Thani family versity of Southern California’s locations, but the is under construction in Los An- president. After the meeting, the identity of Sheikh geles, and it is worth $300 mil- prince and his cousins were trans- Khalifa was kept lion.69 But Al-Thani family is not ferred to USC. But the prince is secret for years, on the front line, a Lebanese im- not interested in university so and the advisers migrant Thomas Barrack is buying much. According to claims, the and lawyers the property for Al-Thani family. prince’s success is because of a called him ‘the Barrack worked with Al-Thani grad student named Juvenal Client’. family in the past, too, to purchase Cortes. He said that he is working Miramax Films and London’s Clar- with the Qatari royal family. He idge’s Hotel. Barrack has good talked with professors on behalf relations with Donald Trump in of the prince and his cousins. business, and he supported They did not need to come to Trump’s campaign in 2016. classes. The prince also used money to get things done. Sheikh Khalifa bin Hamad bin Khalifa Al Thani, the brother of A UK property portfolio, which the current amir of Qatar, has a is worth £ 5.5 bn, has been re- luxurious life in Los Angeles.70 vealed, and it belongs to Sheikh He is educated at the University Khalifa bin Zayed al-Nahyan. Ac- of Southern California, and he cording to the Guardian, Sheikh has a lot of leverage by business Khalifa has many properties in

68 Nicholas Kulish and Michael Forsythe, “World’s Most Expensive Home? Another Bauble for a Saudi Prince”, The New York Times, 16 December 2017. 69 Amy Lamare, “One of L.A.’s Highest Property Tax Bills: 77,000 Square Feet On Chalon Road In Bel Air”, Celebrity Net Worth, 6 March 2020. 70 Harriet Ryan and Matt Hamilton, “The true story of the hearttrob prince of Qatar and his time at USC”, Los Angeles Times,

27 REPORT 26 Investments as Foreign Policy Instruments: The Cases of Saudi Arabia, The UAE and Qatar January 2021

Saudi Aramco, Dhahran Office Complex

London’s most prestigious locations, but the ENERGY identity of Sheikh Khalifa was kept secret for years, and the advisers and lawyers called Energy is also another strategic area into him ‘the Client’. Transactions were carried out which Saudi Arabia, the UAE and Qatar have by different companies and elite London law been pouring millions of dollars. Along with firms. It is claimed that the property portfolio sporadically occurring unexpected investments, was created in a subterranean way through the Gulf states invest in energy resources and stealth-like deals over many years. The Guardian platforms in accordance with their energy exposed Khalifa’s interest in UK properties in strategies. In this respect in 2020, Saudi Arabia 2016. In 2015, the portfolio had swelled in is said to have focused on a $30 billion invest- value to £ 5.5 bn with an annual rental income ment in renewable energy.73 The main driving of £ 160 m. But it is indicated that all of the factor for Saudi Arabia to make this investment properties had been legitimately purchased.71 is the fact that the kingdom’s economic resources are growing narrower than ever in the The Qatar Investment Authority is looking for long-term sovereign funds without short- face of the diminishing role and price of oil. term liabilities to be meet. Estimated assets of Even if an agreement was reached between the wealth fund are $295 m, and it has 50 per Saudi-led OPEC and Russian Federation-led cent and 55 per cent of asset allocation in pri- OPEC+ member countries, the Brent type crude vate and public equity. The Qatar fund partially petrol and West Texas Intermediate petrol do owns the Canary Wharf Group in London, and not seem to satisfy oil producing countries they took an undisclosed stake in the German and their firms. Also, as an energy investment, clinical-stage biopharmaceutical company Saudi Arabia’s national oil company ARAMCO CureVac which is worth $126 m.72 again initiated the process of purchasing a

71 “Leaked documents show how UAE president amassed a £5bn London property portfolio”, Middle East Eye, 18 October 2020. 72 “Qatar Investment Authority: More than half of assets invested in private and public equity”, Middle East Monitor, 17 October 2020. 73 “2025: Saudi Arabia to invest $30billion in renewable energy”, International Finance, 19 February 2020. 74 “Saudi Aramco to review SABIC deal after oil price crash”, Middle East Monitor, 11 May 2020.

28 İsmail Numan Telci I Gökhan Ereli

nearly 70% stake in SABIC (Saudi 2.04% stake.76 Earlier in October, Basic Industries Corporation) Abu Dhabi’s Mubadala Invest- petrochemical company. In the ment Co also invested nearly previous year Saudi Arabia and $855 million in Reliance Industries’ SABIC had reached a deal, how- retail unit, Retail Venture, con- ever, with Mohammed bin solidating the UAE’s investments Salman’s hasty decision, the deal in India.77 was put off. It is expected that Another GCC state which is Saudi Arabia will pay SABIC nearly drastically in need of economic $40 billion, down from its $70 diversification away from oil is billion former pricing.74 Therefore, the UAE. The CEO of one of the economic diversification needs most powerful investment funds could cost Saudi Arabia as much in the Gulf with an estimated as $30 billion in the years ahead, portfolio of $240 billion,78 Khal- possibly by 2025. In late November doon Khalifa Al Mubarak has said of 2020, Saudi In late November of 2020, that the UAE is preparing for a Aramco struck Saudi Aramco struck various busi- $12.66 billion spending by 2050 various business ness deals with companies in in order “to meet its clean energy deals with Europe and Asia, such as Shell needs.”79 Investing only in clean companies in AMG Recycling B.V. in the Nether- energy objectives as much as Europe and Asia. lands, Suzhou XDM in China and $12.66 billion demonstrates that Posco from South Korea. Aramco the UAE is eyeing other energy said that the new investments investments with higher costs. In have been about steel plate man- this respect, the UAE is making ufacturing, 3D printing and other major investments in nuclear en- systems and technologies.75 ergy as well. To realize its self- Along with these new investment sufficiency in energy, the UAE areas, Saudi Arabia has also been plans to open Barakah Nuclear making energy investments in Power Plant that has been built India. Having earlier invested in in Abu Dhabi. Barakah Nuclear fiber optic assets technology, Power Plant, which is a part of Saudi Arabia’s PIF also invested four reactors to be opened up approximately $1.3 billion in Re- by 2023, is estimated to have liance Retail, whose owner is cost over $25 billion.80 There are Mukesh Ambani, for some “the also other investments in renew- richest Indian”, to purchase a able energy, as soon as January

75 “Saudi Aramco eyes news business, signs partnerships with six firms,” ZAWYA, 30 November 2020. 76 P.R. Sanjai and Matthew Martin, “Saudi Arabia’s PIF Invests About $1.3 Billion in Mukesh Ambani’s Reliance Retail,” Bloomberg, 5 November 2020. 77 P. R. Sanjai and Anirban Nag, “Billionare Ambani Gets $855 Million from Abu Dhabi for Retail Venture,” Bloomberg, 1 October 2020. 78 “Where Abu Dhabi’s Mubadala is investing its billions” Arabian Business, 10 December 2019. 79 Rommer M. Balaba, “Investment in renewables consistent with UAE energy strategy” Mubadala CEO”, Arab News, 11 February 2020. 80 Mahmoud Habboush, “Arab World’s First Nuclear Reactor Cleared for Startup”, Bloomberg, 17 February 2020.

29 REPORT 26 Investments as Foreign Policy Instruments: The Cases of Saudi Arabia, The UAE and Qatar January 2021

2020. The UAE-based energy investment com- Qatar is also investing heavily in energy pany Al Nowais chaired by UAE businessman with its Qatar Petroleum and Qatargas national Hussain Al Nowais81 announced that it plans companies. Unlike Saudi Arabia and the UAE, $500 million renewable energy fund through Qatar obtains much more revenue and repu- its AMEA Power which has primarily invested tation from natural gas reserves rather than in Egypt.82 from oil industry, being the third country in the world in having the most natural gas reserves Abu Dhabi’s Mubadala is a primary investor after the Russian Federation and Iran. Qatar is in global technology from as early as the also in cooperation with prominent US com- 2007s. Along with many other major investments panies such as ExxonMobil in exploring new in the US, Mubadala has invested in the Silver gas fields in the Gulf and in the Eastern Mediter- Lake firm in the US, whose primary occupation ranean.86 As early as 2017, it is suggested that is with technology investments, about $2 billion, Qatar has concluded deals with paving the way for a long-term investment • Russian petroleum company Rosneft in strategy between Silver Lake and the Mubadala exchange for $6.83 billion, Investment Company.83 • Netherlands oil company Royal Dutch Abu Dhabi has also heavily invested in agri- Shell in exchange for $2.33 billion, culture-related technologies and firms abroad. One of the latest investments by Abu Dhabi in • French petroleum company Total in agricultural technologies has been the agree- exchange for $2 billion, ment with Louis Dreyfus (LDC). The entity is a • Malaysian petroleum company commodity trader and Abu Dhabi has invested Pengerang Integrated Petroleum nearly $800 million in the LDC. As part of this Complex in exchange for $5 billion agreement, it is stated that LDC will also sell agricultural products to the UAE.84 Along with • Spanish energy company Iberdola in 87 this investment, as part of a wider investment exchange for $2.9 billion. strategy towards Egypt, Abu Dhabi’s ADQ In energy investments, Qatar has also built signed an agreement with Lulu International an Islamic Energy Bank in 2019, with an esti- to make investments worth nearly $1 million mated cost of $10 billion, Qatari Financial in Egypt. ADQ explained that the investment Centre Authority Al-Jaida suggested. 88As Qatar strategy is to build thirty hypermarkets and began to rely on regional and international one hundred mini market stores and logistics partners other than its Gulf neighbors in the hubs across Egypt with the help of Lulu Inter- face of the blockade, Qatari investments in national.85 Turkey, Iran and the US have accelerated after

81AlNowais Investments, https://www.alnowais.com/our-businness/energy-and-infrastructure-project-development/ 82 Salma El Wardany, “U.A.E.’s Al Nowais Plans $500 Million Renewable Energy Fund” 22 January 2020. 83 “Silver Lake and Mubadala Partner to Establish Unique Long-Term Investment Strategy,” Business Wire, 30 September 2020. 84 Sean Cronin, “Abu Dhabi fund boosts food security with $800m Louis Dreyfus deal,” Arab News, 11 November 2020. 85 Archana Narayanan, “Abu Dhabi’s ADQ Pumps $1 Billion Into Lulu’s Egypt Expansion,” Bloomberg, 19 October 2020. 86 Muhsin Tiryakioğlu, “ExxonMobil & Qatar Petroleum to explore Cyprus’ block 10”, Anadolu Agency, 5 April 2017. 87 Neşe Karanfil, “Katar’ın dünyada 335 milyar dolarlık yatırımı var”, Hürriyet News, 5 Haziran 2017. 88 Nuran Erkul Kaya and Tuba Şahin, “İslami enerji bankası Türkiye’deki projeleri de destekleyecek”, Anadolu Agency, 27 March 2019.

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2017. During an official visit to Ankara, Qatari velopment, Qatari officials stated that Qatar Emir Sheikh Tamim bin Hamad Al Thani met and French company Total will build a solar with Turkish President Recep Tayyip Erdogan power plant which would be named “Al and promised an investment package amount- Kharsaah” at a cost of $467 million.91 In a time ing to $15 billion with Turkey would be realized of when the oil and natural gas reliant Gulf within years.89 In 2019 also, the US and Qatari economies such as Saudi Arabia, the UAE and officials along with the Exxon mobil and Golden Qatar are struggling with plummeting global Pass companies’ presence, announced that demand for oil and hence the historical drops Qatar would invest in a gas facility in the US. in the market price of oil, the economic diver- The announcement included a $10 billion proj- sification plans significantly looms large. In ect, which would be spent on an export facility accordance with the global precedence, energy in Texas.90 In addition to its investments abroad, investments of the Gulf states could ramp up Qatar is also making investments to its own countries’ economic growth rates and their energy demands as well. In line with this de- vulnerability with hydrocarbons.

89 Kemal Karadag, “Qatar to make direct investment of $15 billion in Turkey”, Anadolu Agency, 15 August 2018. 90 “U.S., Qatar energy ministers to announce Qatari investment in U.S.: Energy Department” Reuters, 5 February 2019. 91 “Qatar to build new solar power plant”, Al Jazeera, 20 January 2020.

31 REPORT 26 Investments as Foreign Policy Instruments: The Cases of Saudi Arabia, The UAE and Qatar January 2021

CONCLUSION As this study reveals, the international investments of Gulf countries are utilized rather How financial resources are used for in- as instruments for foreign policies of these vestment purposes varies drastically. Interna- actors. While, in some cases, Gulf countries tional investments and foreign investments try to influence the foreign policy decisions of can increase the economic income and prestige a Western country, in other cases these in- of countries. As it is understood, investments vestments aim to counter the increasing foreign are much more than a zero-sum game in terms of both the investor, investment area policy activism of another Gulf actor. Another and the country. Investments also present a motivation of Gulf countries to invest globally diverse image as commercial investments, is to prevent a rival regional or international prestige investments and investments with actor from expanding its reach in various high political interest. Gulf countries with varied sectors such as ports management, airlines, investment instruments and economic incomes sports or energy. have been using foreign investments effectively Finally, foreign investments also constitute for a long time. In addition to being intertwined the project of diversifying the economic re- with the global economy and having free trade sources of the Gulf countries. Gulf countries zones, the large financial resources of political have economies based on petrochemical prod- elites facilitate investments. ucts as well as oil and natural gas revenues. It The political dimensions of foreign invest- is possible for hydrocarbon energy to lose its ments of Gulf countries are varied, just like first position in the sector in the long run. In their economic purposes. Gulf countries, which this way, there are long term investments have investments that have been continuing strategies made with this in mind. for almost 50 years, cannot make investments by excluding political goals. Therefore, most How permenant these investments will be of the investments take place in Western coun- necessarily depends on political processes. tries, just like the majority of the political Admittedly, a detailed investment analysis re- relations of the Gulf countries. Countries such quires further studies. For this reason, this as the US, Britain and France are at the forefront study has the capacity to be the study of a of foreign investments provided by Gulf coun- book that is planned to be published in the tries. future.

32 www.orsam.org.tr orsamorgtr